Danish property returns stay positive over 2008, says IPD (DK)

IPD today published the IPD Denmark Annual Property Index for 2008. According to the index, investment in Danish commercial real estate returned 3.1% last year, compared to 10.1% over 2007.

Property significantly outperformed the equity market, which returned -50.3%1, but lagged behind the bonds markets, which returned 9.5%2.

The best performing sector of the four principal markets was Retail for the second year in succession, returning 7.6%, while the poorest performer was residential which, at -6.5%, was the only market to record a negative return. Total return for offices and industrials were similar, at 3.6% and 4.1%, respectively.

Income return for 2008 was 5.2%, marginally up from the previous year's 4.9% which was the lowest level on record. Consistent with the story across Europe, rising yields across the sectors drove capital values down by -2.0% in 2008. This was especially marked in the residential sector, where capital values fell by -9.2%.

Yields moved out by 30 basis points over the 12 months to end of December 2008, ending the year at 5.6%. This effect was partly offset by a strong market rental value growth of 4.3% year-on-year.

Christina Gustafsson, Managing Director IPD Norden said: "The Danish residential market continues its slump from 2007 with capital values dropping 9.2%. Overall, yields rose across each of the main property sectors, but this was mitigated to some extent by a robust rental market. The commercial property market showed remarkable stability in capital values over period which saw significant falls in other major European countries."